Client Demand for Greater Global Presence Pushes More Law Firm Mergers
Although law firm mergers slumped in the third quarter of 2010, a hot week of potential talks and the marriage of two prominent U.S. and U.K. law firms have prompted some analysts and law firm leaders to predict more domestic and global unions in the near future.
SNR Denton—formerly Sonnenschein Nath & Rosenthal and Denton Wilde Sapte—launched as a top-25 global firm yesterday with more than 1,500 lawyers in 32 countries, according to a press release. Orrick Herrington & Sutcliffe also confirmed preliminary merger talks to form a 1,800-lawyer megafirm with Akin Gump Strauss Hauer & Feld, and Reed Smith and Thompson & Knight are examining a potential combination, the Am Law Daily reports.
“Our clients are telling us overtly or through their actions that they’re going to use a smaller number of law firms, and those firms have to be more nimble, provide value, efficiency, speed and do so with a broad coverage of the globe,” Elliott Portnoy, co-CEO of SNR Denton told the ABA Journal of the impetus for the merger. “We were in danger of not being able to meet those client needs if we didn’t become a global firm.”
Major international clients aren’t the only ones demanding cross-border representation from a single firm. Long-standing middle- and smaller-market clients are demonstrating greater global outlooks, and law firms need to be prepared to meet those aspirations, remarked Portnoy, who predicts more international and domestic combinations.
In fact, of the five law firm acquisitions announced in the third quarter of 2010, four were driven by strategies to extend or strengthen the geographic presence of the acquiring firm, according to Altman Weil principal Ward Bower. And, more are to come.
“There are a number of deals in the works that may signal a turn in the trend, including some highly-publicized discussions between U.S. and U.K. firms,” Bower said in an Altman Weil MergerLine report.